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Kurtis Hemmerling  

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  • Eating Some Humble (Apple) Pie And Hedging Our Position [View article]
    Well, I am happy to see these type of articles for one reason... it means that investors are hitting the maximum pain point and this is usually where things spin around. Huge cash pile, incredible value, it is being treated like a garbage stock that is going bankrupt - yet they are still a great company with big, albiet slowing, profit. When something makes as little sense as this... you keep buying and buying and buying. Now is not the time to hedge... that was when prices were trading up at mega-valuations. You should buy when something as insane as this happens.

    You really think Apple is going to trade at cash value? There is nothing wrong with coming out and saying, "whoops, we thought this would bounce back sooner,"... we all thought so. But to sell out or hedge or anything else when its trading like beet soup... no sireee.
    Apr 18, 2013. 08:36 PM | 12 Likes Like |Link to Comment
  • Apple: Probably Going To Remain Painful For The Average Investor [View article]
    I would love to hear your analysis of what would happen if Apple paid out 80% of its existing cash to shareholders (about 1/3 of current share price is cash) and paid an 80% payout ratio going forward after that on profit... even assuming that earnings growth was a big zero now and forever.

    This may not happen but it does give you a picture of valuation beyond a price chart which just shows investor sentiment and not value.
    Apr 8, 2013. 12:32 PM | 3 Likes Like |Link to Comment
  • 4 February 'Feel Good' Factors For Apple Fanatics [View article]
    Frankly, I'm shocked. Even if Apple just held to this earnings yield and failed to acheive any earnings growth going forward I would consider this a decent low-risk stock to add to something like the Utilities portfolio (due to low valuation, dividends and easy ability to pay future dividends). But we are not talking about electricity or water delivery...this is a stock trading a deep deep value that still has game. I was not a fan of Apple when it was trading around $700 and got slammed for saying so. Now at $450 I think its a great bargain and this is suddenly the unpopular opinion. Apple is a great stock to play provided you are a contrarian investor.
    Feb 2, 2013. 11:35 AM | 22 Likes Like |Link to Comment
  • Why I Am NOT Excited About Apple's Share Buyback Plan [View article]
    I've heard that and read a bit on ssrn on the matter. Seems like the jury is out as to how effective stock options are, higher fraud with buybacks/options than dividends (management can time buybacks to maximize option premiums), whether it improves future earnings or not, implications of shareholder dilution, and if it increases risk-taking from management.

    Still, if I was an employee I would rather be paid a 10K bonus than 10K of stock. If I like the share price - I buy. If I don't, I can invest elsewhere or time my purchase. I won't discredit your theory that it aligns interests - it very well may. But I think paying a 10 billion dollar bonus would be more transparent to shareholders without the hype of somehow increasing shareholder equity.
    Mar 25, 2012. 08:54 PM | Likes Like |Link to Comment
  • Why I Am NOT Excited About Apple's Share Buyback Plan [View article]
    I respect your view. Some investors view the money as being in different pots as the compartmentalize it. I prefer to see it as one big money pot. One example is PGH. They have massive dilution yet they pay a 8.9% dividend yield. Some say that the two are separate as the dividend is keeping with a status quo and they need to dilute for CAPEX. I think that if you need to borrow money, quit paying out dividends and problem solved.

    I do view the dividend, buyback, and bonuses as being intertwined. I believe that there is ultimately a better way to handle this for shareholder value. If Apple really felt that prices were undervalued at this point they would've went 'all in' on buybacks instead of doing just enough to cover dilution. To me this signals a bit of ambivalence.

    In a typical buyback the shareholder increases his worth as he gets the difference between when shares were bought back and where prices go. You buy shares at $600, stock goes to $1,000 and the $400 difference was a smart move. But I can't see how shareholders profit in this scenario. They use $10 billion in cash now to replace it with $10 billion in stock later or if they replace it share for share it might be $15 or $20 billion in stock. Either way I can't see any scenario that shareholders gain when you balance cash and dilution - regardless of share price. If the diluted shares were going into company coffers - then yes, shareholders would get the difference. But the company is buying back shares at $600 and giving it as a present at $1,000 (as an example), but the $1,000 is not cash funneled back into the kitty to replace the $600 spent.
    Mar 23, 2012. 08:01 AM | 1 Like Like |Link to Comment
  • Why I Am NOT Excited About Apple's Share Buyback Plan [View article]
    I appreciate your response. Whether or not investors agree with me is immaterial. Respectful banter and contrary opinions that challenge a commonly held view is what leads us to better and more well informed decision making. You seem to get the point of this article regardless of your personal view.
    Mar 22, 2012. 09:24 AM | Likes Like |Link to Comment
  • Why I Am NOT Excited About Apple's Share Buyback Plan [View article]
    So scenario A you have $10 billion in dilution offset by an extra $10 billion in cash.

    Scenario B you have $0 dilution offset by $0 in cash.

    Still not seeing the shareholder value here. Beyond this moot point, the announcement to pay dividends on unvested grants does hurt shareholder value.
    Mar 22, 2012. 06:16 AM | Likes Like |Link to Comment
  • Why I Am NOT Excited About Apple's Share Buyback Plan [View article]
    Based on their announcement they are not reducing outstanding shares. Buybacks that reduce shares does increase EPS. If you dilute and buyback the same shares you are down cash spent on buybacks. This is my point - buybacks increase EPS proportionate to reduction of outstanding shares. No reduction of shares means no boost in EPS.

    You could make a weak argument that they are stemming EPS loss from dilution and my response would be they shouldn't dilute in the first place but make a direct transfer of cash to employees. If employees think Apple shares are a good value - let them buy but don't force them to. This is better for employees, better for investors in Apple, but not better for the company giving the illusion of helping shareholder value.
    Mar 21, 2012. 08:50 PM | Likes Like |Link to Comment
  • Why I Am NOT Excited About Apple's Share Buyback Plan [View article]
    I'm open for a discussion on this. Why is the buyback covering dilution a smart move as opposed to paying the $10 billion in cash as direct bonuses?
    Mar 21, 2012. 05:19 PM | 1 Like Like |Link to Comment
  • Why I Am NOT Excited About Apple's Share Buyback Plan [View article]
    Employees should get their bonuses. I'm saying that I don't like the way they are doing it. In this instance the buybacks do not create shareholder value nor does it return a single penny to the investors. If buybacks is equal to dilution than all they did was make it very expensive to pay their employees a $10 billion dollar bonus. It is a bit misleading as well. Look at all the happy investors that think the share buyback - as it stands today - will somehow be a good thing for the shareholder like a real buyback plan that lowers the amount of outstanding shares for a higher EPS.

    On the other hand the price momentum created through the act of buying back - although having no effect on valuations in this instance - could be used to pad a pullback and 'manage prices' for a smoother ride much like accountants 'manage earnings'.
    Mar 21, 2012. 05:14 PM | 1 Like Like |Link to Comment
  • Why I Am NOT Excited About Apple's Share Buyback Plan [View article]
    So they buyback $10 billion dollars worth of shares now and becuase of higher share prices the market cap dilution is $20 billion... I'd rather they set aside the money in a vault than play this dilution/buyback game.
    Mar 21, 2012. 05:09 PM | Likes Like |Link to Comment
  • Don't Overweight Your Portfolio With Apple [View article]
    Ok - gotcha. Thanks for adding another perspective to the mix.

    What I meant on dividends lowering PE ratios is that share prices do come down dollar for dollar on ex-dividend day equal to the dividends per share - and a lower price at the same earnings gives you a better PE ratio. This isn't a bad thing as it gives the stock 'value' based on earnings (but not using book ratios).

    Thanks for adding a good explanation of what you meant.
    Feb 27, 2012. 04:11 PM | Likes Like |Link to Comment
  • Don't Overweight Your Portfolio With Apple [View article]
    Don't read too much into a handle Skippy09. I do intraday trading to long-term growth and value investing with everything inbetween. What about the advice do you not like? What portfolio weight to you see as optimal? More or less than 50%?
    Feb 27, 2012. 10:56 AM | 1 Like Like |Link to Comment
  • Don't Overweight Your Portfolio With Apple [View article]
    lol. You'd be surprised by the people not diversifying b/c of the Apple story. But more than that I wanted to throw in some viable strategy alternatives that could achieve similar gain while still adding a mix of companies.
    Feb 27, 2012. 09:25 AM | Likes Like |Link to Comment
  • Don't Overweight Your Portfolio With Apple [View article]
    It was an attempt to inject some humor into the article and was not meant to be snide as the article shows I like Apple. Too bad you wrote your comment before an objective analysis of what the article was really about.

    If find the tone of your first sentence full of contempt and didn't bother reading anything after the second sentence. Oh wait - that was another wasted attempt at humor - sorry.
    Feb 27, 2012. 08:51 AM | 1 Like Like |Link to Comment
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